The Lightning Network addresses Bitcoin's base-layer throughput limits by moving the majority of transactions off-chain. Two parties open a payment channel by committing funds in an on-chain transaction, then transact instantly and cheaply between themselves as many times as they like, settling the final balance back to the blockchain when the channel closes. Channels interconnect into a network, so payments can route between users who do not share a direct channel — making Bitcoin practical for everyday micropayments and point-of-sale use.